Alternatives to the Property Tax Cap

Considering options without the possibility of losing services.

There has been a residential burglary as well as items stolen from a couple of cars in the area of Westville Avenue and Washburn Place. Police are reminding residents of Caldwell to lock their homes and automobiles.

These recent incidents underline the importance of why we need the police, not only do they keep us safe, but they also keep us informed of what possible dangers are out there. Their presence alone can give most people a feeling of security and fairness.

Especially at this time, we remember all the police officers and firemen that sacrificed their lives on Sept. 11, 2001 to save people they never met before. These unselfish acts are an incredible testimony to the police and firefighters in every state.

This is something to think about as politics change in New Jersey. Everyone is tired of paying such high property taxes in New Jersey, and especially in these hard economic times, and many welcomed Gov. Chris Christie's property tax cap agenda.

It seems like a great idea at first, but you have to understand the first rule of economics: "There are no free lunches." By decreasing the amount of taxes paid, you ultimately decrease the amount of services rendered, and that is something that no one wants.

This is a reality of the enacted property tax cap, and how it can drastically affect Caldwell and something that might have been overlooked. But we can learn from other states that have gone through this already, recently Massachusetts had a similar problem and enacted a property tax cap, with surprising results. Towns in Massachusetts have eliminated police and firefighter positions and closed stations, increasing the time to respond to emergencies. Senior citizen centers and recreation facilities in Massachusetts also have closed or reduced their hours substantially. Public libraries have limited their hours of operation or closed, with some remaining open only because of volunteer fundraising. Massachusetts localities have also been forced to postpone road maintenance.

There are other remedies besides a property tax cap; a state can guarantee individual property tax relief through a well-designed "circuit breaker," or tax credit that prevents homeowners' and renters' property taxes from exceeding a specified percentage of their income.

When using a circuit breaker, it is important for the state to provide sufficient public education and publicity around the credit so that residents understand the amount of property tax relief they are receiving and perceive that the credit is property tax relief rather than a reduction in their income tax. It is also important for residents to be able to rely on the property tax relief each year.

Another solution to this problem might be to shift from focusing on property taxes to other sources of revenue. Allowing localities to levy income taxes or sales taxes could help. Several states have local income taxes, including Maryland, Pennsylvania and Ohio, as well as New York City.  Localities levy sales taxes in the vast majority of states.

A variety of other types of taxes also are levied at the local level or shared by states and localities in different states. New Jersey does not allow localities to levy income taxes or sales taxes; localities are nearly entirely dependent on property tax revenues to fund programs and services.

Another way a state can reduce dependence on property taxes is to reallocate the responsibilities between itself and its localities, with the state directly assuming some responsibilities and supporting them with state revenue sources.


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